With Hospital Tax Still On The Table, Health Care Officials Descend On Capitol

Gov. Dannel Malloy's budget would give municipalities the option to tax hospital-owned real estate, though property such as MRI machines and computers would continue to be tax-exempt.

As the hospital executives and their lobbyists descended on the legislative office building in Hartford, some lawmakers signaled that they are taking steps to repair the fractious relationship between the industry and state government.

Rep. Jonathan Steinberg, a Westport Democrat who serves as co-chairman of the legislature's public health committee, said he has begun meeting with hospital officials to develop a plan to strengthen Connecticut's 27 acute care hospitals. "Hospitals are among our largest employers," he said. "We need to recognize that if were going to keep our economy moving forward, we need to be encouraging our hospitals to grow rather than finding ways for them to cut employees, which has a ripple effect throughout the economy."

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Speaking to a room full of hospital executives and other health care professionals at a press conference on Wednesday, Steinberg said he and Rep. Linda Gentile of Ansonia have been tasked by House Speaker Joe Aresimowicz to engage in a broad conversation about the future of the industry.

"We are looking at new ideas such as additional capital funding...believe it or not incentives to encourage hospitals to do what they need to do in terms of making investments, workforce development and easing regulatory burdens where it makes sense to do so," Steinberg said. "Let's look at those mandates and figure out how we can make it easier to provide quality care."

While Steinberg did not provide specifics, the conciliatory tenor of his comments stands in marked contrast to the often antagonistic relationship between Gov. Dannel P. Malloy and the Connecticut Hospital Association, an industry group.

The governor's budget proposal would give municipalities the option to tax hospital-owned real estate for the first time, though property such as MRI machines and computers would continue to be tax-exempt. To help cushion the blow of the new tax, the state pledged to increase its supplemental Medicaid payments to hospitals. Medicaid, paid for by states and the federal government, provides health insurance for low-income and other needy people.

Hospital workers are skeptical. In scrubs and suits, they arrived en-mass at the state Capitol in Hartford Wednesday to lobby against Malloy's plan.

"Connecticut hospitals have been taxed and had their funding cut by more than $2 billion" in recent years, said John Murphy, a physician and CEO of Western Connecticut Health Network. "We simply can't absorb any more cuts and we cannot revisit this debate every other year. These cuts hurt everyone."

Murphy said the governor's plan would result in higher costs for patients with commercial insurance, fewer health programs and services, thousands of staff layoffs and longer wait times for care. "Unfortunately, it is the weakest and the poorest among us who are harmed the most,'' he said.

The Malloy administration sharply disputed the dire scenario painted by the industry. Malloy spokesman Chris McClure dismissed the hospital association's comments as "normal exaggeration before the legislature by a group looking for more public money."

McClure said the governor's proposals would raise up to $208.2 million for Connecticut's struggling cities, home to most of the state's big hospitals. But it also includes $250.3 million in additional supplemental payments for hospitals – providing an additional $42.1 million for hospitals.

"The hospitals would have you believe they alone are shouldering a tremendous burden on behalf of the state's residents in order to address the state's fiscal difficulties, and are subject to taxes so onerous that they can barely stay in business,'' McClure said.

Jennifer Jackson, CEO of the hospital association, said hospitals are wary of entering into such a deal. "Experience causes us to question whether those funds would be sent hospitals,'' she said.

Jackson cited uncertainty about federal health care policy under President Trump. "We also don't know if we could count on those funds,'' she said.

Aresimowicz said he backs efforts to recoup more federal Medicaid money but was non-committal on the prospects of the hospital real estate tax. "I wouldn't call it dead,'' he said. "I have said all along I will not enter negotiations [by] pulling anything off the table...I'm trying to explore other possibilities to do the same thing: have investments into our cities, have hospitals take advantage of all the reimbursements from the federal government that they can."